NH’s Minority Shareholders May Ask To Join The Board

29 May 2015 – Expansión

29 June / The agenda for NH’s shareholders’ meeting does not currently include the appointment of any new directors. UBS now holds a 4.36% stake.

In the interests of progress in terms of corporate governance and to increase transparency, many listed companies, including the NH Hotel Group, are adapting their corporate bylaws to the new Capital Company Act. Thus, NH will include a item on the agenda of its shareholders’ meeting, which will be held on 29 June, about the reasonable balance of its board of directors, whose composition should reflect the relationship between the stable and free-floating capital.

In fact, the composition of NH’s board of directors has sparked unrest amongst the fund managers and minority shareholders due to the hotel group’s decision to not cover the two vacant positions left by Intesa Sanpaolo, when it sold its shares, by independent directors. Yesterday, their fears were confirmed. The agenda for the shareholders’ meeting includes the ratification of two directors – Francisco Román as an independent director and Ling Zhang as a representative of HNA, the majority shareholder of NH – and the renewal of two other directors – José María López-Elola, as an independent director and José Antonio Castro, as a representative of the Hesperia Group. There was no mention of any new appointments.

NH’s board comprises 11 people in total: four representatives of HNA – which holds a 29.5% stake -, two from Hesperia – with a 9.09% stake -, three independent directors, the CEO – Federico González Tejera – and the Chairman – Rodrigo Echenique-, who continues in the role despite the exit of Banco Santander, the shareholder that he previously represented.

Nevertheless, the composition of the board may change in the short term. The 8.56% stake held by Santander was distributed amongst three (fund) managers, which already held stakes in NH: BlackRock, Oceanwood and Henderson. The first two now hold more than 7.5%. The funds, which have shared their concerns about the reduction in (the size of) the board with NH, will request their own inclusion on the board of directors and their request may be discussed at the shareholders’ meeting. According to the bylaws, shareholders that represent at least 3% of the share capital have five days following the announcement of the shareholders’ meeting to request the inclusion of one or more items on the agenda.

Meanwhile, UBS now owns a 4.36% stake. On 21 May, the Swiss bank purchased 9.13 million shares from Santander for €46.57 million.

The Chairman

Rodrigo Echenique received €300,000 in 2014. This year, he will receive €200,000, i.e. 33% less.

The CEO

Federico González Tejera, the CEO, earned €1.62 million (in 2014), up 34%. His variable salary amounted to €788,000.

The other board members

In addition to Echenique and Tejera, the 16 people that held positions on the board in 2014 received €692,000 in total.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

NH’s Minority Shareholders Fear HNA Will Take Control

19 May 2015 – Expansión

Intesa’s exit from the share capital increases HNA and Hesperia’s control over NH – six of the hotel chain’s eleven directors are representives of the two largest stakeholders.

The funds and minority shareholders of the NH Hotel Group have expressed their concern following a decision by the Board of Directors not to appoint any more independent directors and therefore increase, albeit indirectly, the control exerted by the Chinese giant HNA and the Hesperia Investor Group – the two largest shareholders.

At the end of January, Intesa Sanpaolo put an end to its eight year investment in NH by selling its 7.6% stake. At the time, the Italian entity had just one director (Livio Giovanni Maria Torio) since its other representative (Rosalba Casiraghi) resigned in December 2014; her exit left NH without any female directors and granted HNA its fourth executive.

Following Intesa’s divestment, NH’s Board of Directors decreased from 13 to 11 members. And so it will remain for the time being. Last week, the management body approved the accounts for the first quarter. It also referred the appointment of Francisco Román and Ling Zhang (appointed by co-optation) and the re-election of José Antonio Castro and José María López-Elola (following the expiry of their mandates) for approval by the General Shareholders’ Meeting, which will be held in June. There was no mention of (the appointment of any) more independent directors, which has aroused concern amongst NH’s fund managers and minority shareholders, since the hotel chain’s corporate bylaws provide for a maximum of 20 directors and a minimum of five.

Over the last few years, funds such as THS, BlackRock, Fidelity and Invesco have all acquired shares in NH, although in most cases, their stakes, which fluctuate constantly, are currently trading at below 3%. Currently, four of the eleven directors represent HNA and Hesperia has two directors, even though it has reduced its stake by 8.56% to 9.09%.

Corporate governance

The counterweight are three independent directors, together with the CEO, Federico González and the Chairman, Rodrigo Echenique, who represents Santander and whose exit from NH is expected in the medium term. The concern of the minority shareholders is that, as well as violating corporate governance standards, HNA, which owns a 29.5% stake, will strengthen its hold over NH without launching a public takeover bid (OPA) for the company. If the CNMV establishes that NHA and Hesperia control NH between them, it may compel them to launch a takeover bid for 100% of the share capital.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

UBS Strengthens Its Stake In NH Following Intesa’s Exit

2 February 2015 – Expansión

New movement in the share capital of the NH Hotel Group: the identity is now being revealed of the entities that purchased the 26.77 million shares – representing 7.6% of the hotel chain’s capital – that Intesa San Paolo sold just over a week ago. UBS is the first company to acknowledge that it took advantage of the Italian bank’s exit to strengthen its holding in NH; it acquired around 1% of the total capital – 3.48 million shares – on 23 January, according to CNMV records.

Together with the shares that it already held in its portfolio, the Swiss bank now owns 11,630,402 shares, representing 3.3% of NH’s capital. Intesa sold its shareholding for €113.8 million, at a price of €4.25 per share, which brings the total amount of UBS’s transaction to €14.81 million.

New shareholder profile

Following the acquisition, the Swiss entity becomes the fifth largest shareholder in NH, whose main shareholder is the Chinese conglomerate HNA, with a 29.5% stake. It is followed by the Inversor Hesperia Group (9.09%), Banco Santander (which become a shareholder in December after taking over 8.56% held by Hesperia, to which it acts as the main lending entity) and the fund THS (3.89%).

Almost all of NH’s share capital has changed hands in less than two years, following the exit of its traditional shareholders, such as Bankia, Amancio Ortega – the owner of the retail empire Inditex – and Intesa. NH’s share price was €4.39 at close of trading on Friday, down 0.23%. Its price has rise by 10.44% this year.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake